Mercury – HY2018 Results and Interim Report

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Mercury (NZ) Limited
Results for announcement to the market

Reporting Period Six months to 31 December 2017
Previous Reporting Period Six months to 31 December 2016

Amount (000s) Percentage change
Revenue from ordinary
activities
$NZ 958,000 20.4%
Profit (loss) from ordinary
activities after tax
attributable to security
holder
$NZ 132,000 16.8%
Net profit (loss)
attributable to security
holders
$NZ 132,000 16.8%

Interim/Final Dividend Amount per security Imputed amount per
security
Interim Dividend $0.06 $0.023333

Record Date 15 March 2018
Dividend Payment Date 3 April 2018

Comments: A supplementary dividend of $0.010588 per share will
be payable on the interim dividend to shareholders who
are not resident in New Zealand

---

Record generation and earnings for Mercury in half year result
Summary
>> Record total generation of 4,107 GWh, up 9% on same period last year
>> Record operating earnings (EBITDAF) $301 million, up 11.4%
>> Fully-imputed interim dividend 6.0 cents per share to be paid on 3 April 2018

27 February 2018 – Mercury has gained momentum in the half-year to 31 December with earnings
(EBITDAF) rising to record levels.
Mercury’s interim financial result was driven by favourable North Island rainfall supporting record hydro generation
of 2,694 GWh up 14% from 2,367 GWh in the prior corresponding period.
Chair Joan Withers said that the conditions coincided with lower than average output from South Island hydro
generators playing to Mercury’s strategic locational advantage.
Financial Results
HY2018 HY2017
EBITDAF ($M) 301 270
NET PROFIT AFTER TAX ($M) 132 113
UNDERLYING EARNINGS AFTER TAX ($M) 114 94
INTERIM DIVIDEND (CENTS PER SHARE) 6.0 5.8

Stay-in-business capital expenditure increased to $59 million in HY2018 from $54 million in HY2017 due to
completion of technology upgrade projects and execution of hydro and geothermal maintenance plans.
Operating costs were up $4 million due to phasing of activity in the prior year. Full year operating costs are
expected to be in line with FY2017, consistent with the prior four years.
Our customers
Customer growth continued through the period, up 1,000, attributable to Mercury’s loyalty-focused customer
strategy. In a highly competitive market, relative churn was maintained at a materially lower rate than the market
average through attention to inspiring, rewarding and making things easy for customers.
Participation in the Airpoints
TM
rewards programme grew with around 150,000 of Mercury customers now enjoying
rewards through membership of the programme as at 31 December 2017, up from nearly 100,000 at the same time
a year ago.
Our people
Mercury recently received a number of accolades, including two premier marketing awards, and in January was
named Best Enterprise Workplace (750+ employees) in the IBM Best Workplaces Awards.
“These things don’t happen by accident. Instead it reflects the great work of Mercury’s people, which I acknowledge
on behalf of the Board,” says Ms Withers.
Mercury is developing the capability of its people through a high performance teams programme.

2

Programme of work
Chief Executive, Fraser Whineray, said that a strong focus on execution in the half year was particularly pleasing.
As an example, Mercury’s core SAP IT platform, which supports many customer interactions as well as behind-the-
scenes processing, was upgraded in November with disruption kept to an absolute minimum, Mr Whineray said.
Mercury also launched a refreshed e-bike marketing campaign during the half year to inspire New Zealanders to
enjoy energy in more wonderful ways.
Investing in growth
Mercury continues to pursue growth. It has selected Tesla as the supplier for a grid-connected battery storage trial.
Mercury’s Research & Development Centre in Auckland was winner of the Most Innovative New Initiative Award by
the Sustainable Electricity Association of New Zealand.
During the half year Mercury investigated the prospect of expanding its metering capabilities through an acquisition
opportunity in Australia.
“While ultimately unsuccessful with the bid, the process helped refine our view of relevant businesses that could
support growth. We will continue to explore other opportunities with a strong commercial lens,” Mr Whineray said.
Outlook
Mr Whineray said Mercury was well positioned to build on the strong momentum.
“Electricity demand has been higher across all sectors except the industrial sector. Drier weather conditions in
many areas of the country contributed to increased demand from both dairy processing and irrigation relative to the
prior period. This demand growth is supported by population growth in key regions offsetting per-household
consumption decreases.
“Mercury continues to invest in solar, battery storage and other customer-led home and transport technologies to
ensure we continue to be at the forefront of offering choice to consumers,” Mr Whineray said.
“The momentum established though our rebrand in FY2017, and the leadership and high performance work we are
undertaking with our people, has been enhanced in this half year. This signals to me that we are in good shape to
continue to deliver value.”
FY2018 Guidance
Mercury’s FY2018 EBITDAF guidance is $530m subject to any material events, significant one-off expenses or
other unforeseeable circumstances including hydrological conditions. FY2018 stay-in-business capital expenditure
guidance remains at $115 million.
The full year ordinary dividend guidance remains at 15.0 cents per share, a 2.7% increase on FY2017.
Dividend
Ms Withers said Mercury’s 85,000 owners, including the Crown, would receive an interim fully-imputed dividend of
6.0 cents per share, an increase of 3.4%. This represents 40% of the full-year ordinary dividend guidance of 15.0
cents per share. The interim dividend will be paid on 3 April 2018.
For further information:
Media – Craig Dowling 0272 105 337
Investors – Tim Thompson 0275 173 470
ABOUT MERCURY NZ LIMITED
Mercury’s mission is energy freedom. Our purpose is to inspire New Zealanders to enjoy energy in more wonderful
ways and our goal is to be New Zealand’s leading energy brand. We focus on our customers, our people, our
partners and our country; maintain a long term view of sustainability; and promote wonderful choices. Mercury is
energy made wonderful. Visit us at: www.mercury.co.nz

---

Financial Results
Six months ended 31 December 2017

WILLIAM MEEK
Chief Financial Officer
FRASER WHINERAY
Chief Executive
27 February 2018

DISCLAIMER
The information in this presentation has been prepared by Mercury NZ Limited with due care and attention. However, neither the
company nor any of its directors, employees, shareholders nor any other person shall have any liability whatsoever to any person for
any loss (including, without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in
connection with it.
This presentation may contain projections or forward-looking statements regarding a variety of items. Such projections or forward-
looking statements are based on current expectations, estimates and assumptions and are subject to a number of risks, uncertainties
and assumptions. There is no assurance that results contemplated in any projections and forward-looking statements in this
presentation will be realised. Actual results may differ materially from those projected in this presentation. No person is under any
obligation to update this presentation at any time after its release to you or to provide you with further information about Mercury NZ
Limited.
A number of non-GAAP financial measures are used in this presentation. You should not consider any of these in isolation from, or as
a substitute for, the information provided in the unaudited consolidated financial statements for the six months ended 31 December
2017, which are available at www.mercury.co.nz.
Forward-looking statements are subject to any material adverse events, significant one-off expenses or other unforeseeable
circumstances including hydrological conditions.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any
recommendation. Nothing in this presentation constitutes legal, financial, tax or other advice.
FINANCIAL RESULTS
2

HIGHLIGHTS
3

OUR MISSION
4

HIGHLIGHTS
5
HY2018 HIGHLIGHTS
One brand,
MERCURY
Bringing together our
heritage and our
customer-driven
innovation
$301m
RECORD EARNINGS
Achieved through favourable hydrological
conditions aided by strong
pan-company execution
RECOGNITION
Of pan-company performance with
multi-award-winning ‘Energy Made
Wonderful’ campaign and
workplace engagement programme
6.0cps
INTERIM DIVIDEND
Fully-imputed interim dividend increase of
3.4% versus HY2017

4,107GWh
RECORD GENERATION
As Mercury capitalised on opportunities
provided by hydro inflows and maintained
high geothermal availability

LOYALTY
Mercury’s continued focus on rewarding,
inspiring and making it easy for existing
customers has maintained our
below-market churn position

Capital expenditure of
$59m
Included completion of geothermal
drilling, technology platform upgrades
and ongoing hydro refurbishment

FINANCIAL HIGHLIGHTS
6
>Record financial performance achieved through pan-company execution
>Earnings lifted by Mercury’s ability to achieve record generation with elevated wholesale prices
348
270
113
94
140
54
80
387
301
132
114
154
59
83
0
50
100
150
200
250
300
350
400
450
Energy MarginEBITDAFNPATUnderlying EarningsFree Cash FlowCapital ExpenditureDeclared Ordinary
Interim Dividend
$m

HY2017
HY2018
HIGHLIGHTS

DELIVERING CUSTOMER ADVOCACY
>Sustained below-market churn position
>Mercury brand trader churn
1
significantly lower than market at 5.5%
2
>Trader churn for all Mercury brands remains below market at 7.3%
3
versus 7.9%

>Customer-led technology investment
>Completion of SAP technology platform upgrade enabling more efficient fulfilment
of our customer promises
>Effective customer engagement
>Widespread consumer engagement generated through ‘Energy Made Wonderful’
campaign – winner of the 2017 Grand Effie, New Zealand’s premier marketing
award, and the Supreme TVNZ NZ Marketing Award
>Mercury’s Contact Centre winner of eight awards at the 2017 CRM Contact
Centre Awards
>High impact offerings
>150,000 customers being rewarded with Airpoints Dollars™
>GEM, our usage monitor, is one of our most popular services with ~100,000
customers engaging every week
STRATEGIC DRIVERS & HY2018 OUTCOMES
7
1
Switching where a customer changes retailer without moving house

2
12-monthly rolling trader churn (Mercury brand only) as at 31 December 2017
3
12-monthly rolling trader churn / total churn (all Mercury brands) as at 31
December 2017
4
Based on Mercury’s monthly survey of residential customers, 6-monthly rolling
average to 31 December 2017 for Mercury brand (excludes Bosco and GLOBUG)

18.9%
Total churn
3
FY2017: 17.7%
Market: 21.0%


5.5%

Mercury brand
trader churn
2
FY2017: 4.4%
Market: 7.9%

62%
Customer
satisfaction
4
HY2017: 61%

HY2018 OUTCOMES

95%
Geothermal
availability
3


FY2017: 96%
Market
4
: ~97%


1.07
LWAP/GWAP
2
FY2017: 1.05


0.86
HY2018 TRIFR
1
FY2017: 1.05

LEVERAGING CORE STRENGTHS
>Goal of zero-harm
>TRIFR
1
at 0.86 (down from 1.05 in FY2017) with no high-severity incidents
>Increasing employee engagement
>Winner of the Best Enterprise Workplace (750+ employees) category in the IBM
2017 Best Workplaces Awards and the Workplace Engagement Programme of
the Year at the 2018 New Zealand HR Awards
>Successful project execution
>Completed the drilling of a replacement geothermal well at Ngatamariki
>Carried out major maintenance outages at Rotokawa, Nga Awa Purua and Mokai
Geothermal Stations on-time and under budget
>Upgrade of Customer & Billing platform (SAP) and Asset Management/Work
Management platform (IBM Maximo) with Metrix project ongoing
>Ongoing hydro refurbishment with the rehabilitation of the 2
nd
of 4 units at
Whakamaru Station and work commencing at Aratiatia Station
>Competitive advantage enabling record earnings
>High geothermal availability and favourable hydrological conditions enabled
record generation of 4,107GWh leading to HY2018 EBITDAF of $301m
STRATEGIC DRIVERS & HY2018 OUTCOMES
8
1
Total Recordable Injury Frequency Rate per 200,000 hours; includes onsite
employees and contractors
2
Average price of purchases (LWAP) over average price of generation (GWAP)
3
Percentage of time plant able to generate after accounting for outages
4
Derived from Transpower’s New Zealand geothermal generation data
(excluding Mercury operated plant)
HY2018 OUTCOMES

DELIVERING SUSTAINABLE GROWTH
>Managing cost
>Opex higher versus HY2017 but on on track to be flat for the financial year
>Investing in growth
>Testing new technology possibilities with the selection of Tesla as the provider for
a grid-connected battery storage trial
>Southdown Research & Development Centre winner of the Most Innovative New
Initiative Award by the Sustainable Electricity Association of New Zealand
>Pursued acquisition of AGL metering assets but ultimately unsuccessful
>Growing returns to shareholders
>HY2018 interim dividend up 3.4% to 6.0cps
>FY2018 EBITDAF guidance is $530m subject to any material events, significant
one-off expenses or other unforeseeable circumstances including hydrological
conditions
>Full-year guidance of 15.0cps maintained which will be the 10
th
consecutive year
of ordinary dividend growth
STRATEGIC DRIVERS & HY2018 OUTCOMES
9
HY2018 OUTCOMES

10
MARKET DYNAMICS

11
MARKET THESIS
ANTICIPATED MARKET OUTCOMES
>Demand growth
>Increased wholesale price volatility in the absence of high hydro inflows
>Futures price increase
>Commercial and Industrial (C&I) pricing increase
>Retail churn reduction
>Upward pressure on retail price


FUNDAMENTALS: SUPPLY AND DEMAND BETTER BALANCED


?
MARKET DYNAMICS
Pressure on retail margins
expected if wholesale price
and volatility remains elevated
}
?
?
?

WEATHER CONDITIONS AND FUNDAMENTALS SPUR DEMAND GROWTH
MARKET DYNAMICS
12
>Demand higher across all sectors except industrial
>Drier weather conditions in HY2018 contributed to increased demand from both dairy processing and irrigation relative to HY2017
>Industrial sector continues to show low/no growth
>Demand growth supported by positive movement in fundamental drivers
>Urban and rural demand supported by high population growth rate
1
despite per household consumption decreasing

Source: Transpower SCADA data, Mercury
1
2017 NZ population growth rate highest in OECD
2
Normalised for temperature
Sector GWh Sector % Total %
Urban
2
+137 1.7% 0.7%
Rural
2
+79 2.4% 0.4%
Dairy processing +71 2.2% 0.4%
Irrigation +107 20.4% 0.5%
Industrial -13 (0.3%) (0.1%)
Other +39 12% 0.2%
Total +420 2.1%
HY2018 NORMALISED DEMAND GROWTH BY SECTOR

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Urban*Rural*DairyTiwaiIndustrial
(excluding
Tiwai)
Irrigation
GWh

DEMAND
HY2014HY2015HY2016
HY2017HY2018

R² = 0.427
$0
$50
$100
$150
$200
$250
$300
-1500-1000-500050010001500
OTA Wholesale Price ($/MWh)

Delta to SI Storage Average (GWh)
SI MONTHLY HYDRO STORAGE AND PRICE
Jan 1999 to Jun 2015
FY2016
FY2017
FY2018
Jan-18
Dec-17
R² = 0.0407
$0
$50
$100
$150
$200
$250
$300
-400-2000200400
OTA Wholesale Price ($/MWh)

Delta to NI Storage Average (GWh)
NI MONTHLY HYDRO STORAGE AND PRICE
Jan 1999 to Jun 2015
FY2016
FY2017
FY2018
Jan-18
Dec-17
Graphs Source: NZX Hydro, Pricing Manager (NZX), Mercury
1
Generation-Weighted Average Price / Time-Weighted
Average Price
2
Based on 15yrs to 31 Dec 2017
13
MARKET DYNAMICS
MERCURY’S HYDRO ADVANTAGE LIFTS GENERATION VALUE
>Above average North Island (NI) inflows coincided with low South Island (SI) storage in HY2018
>Large SI hydro catchments and associated hydrology drive wholesale prices
>Mercury’s hydro catchment has low correlation to SI hydrology as demonstrated by MCY long-term GWAP/TWAP
1

ratio of 1.06 versus 0.95 for major SI generators
2


~15% of annual average generation
17% of total energy storage
28% of average annual inflows
~30% of annual average generation
83% of total energy storage
72% of average annual inflows

$60
$65
$70
$75
$80
$85
$90
$95
Jan-15
Apr-15
Jul-15
Oct-15
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
$/MWh

FUTURES PRICE
(2 year average price starting 3 quarters ahead)
Otahuhu
Benmore
>Short-term futures reflecting changes in hydrology
>Opportunities for Commercial and Industrial contracting limited as buy-side activity curtailed when prices elevated
>Medium-term futures still range-bound (~$73-$83/MWh Otahuhu) despite balanced supply/demand equilibrium
FUTURES PRICING DRIVEN BY SHORT-TERM HYDROLOGY
MARKET DYNAMICS
14
$60
$65
$70
$75
$80
$85
$90
$95
CY18CY19CY20
$/MWh

ASX FUTURES PRICING
As at 31 Dec 2016As at 31 Mar 2017
As at 30 Jun 2017As at 30 Sep 2017
As at 31 Dec 2017As at 22 Feb 2018
Graphs Source: ASX

CUSTOMER STRATEGY SUPPORTED BY DIGITAL EXECUTION
70%
DIGITAL
CUSTOMER
SATISFACTION
1
>Successful implementation of our core technology foundations
>Upgrade of Customer & Billing platform (SAP HANA) and completion of
Business Applications migration to Amazon Web Services
>Upgrade of Asset Management and Work Management platform (IBM Maximo)
>Metrix operating platform delayed but completion expected in FY2018

>Growing customer engagement capability
>Implemented new digital elements including online customer ID capture, quote
E-mailing and web chat
>Design and improvement of our digital channels guided by solid analytics
and insights

>Realising customer promises to Reward Me, Inspire Me and Make It Easy
>Customer traffic to our “Join” pages increased by ~1,400/month in Q2 FY2018
after improving and simplifying the path to purchase journey
1
3-monthly rolling percentage of customer online interactions where
satisfaction was rated an 8-10 on a 0-10 scale in Mercury’s own survey
MARKET DYNAMICS
15

0%
5%
10%
15%
20%
25%
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Annual Churn

NATIONAL CHURN RATE
(12mth rolling)
All Retailers
Mercury
Mercury Brand
0%
10%
20%
Jan-16
Apr-16
Jul-16
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Jan-18
Switches
Withdrawn
1

>Market churn trended higher in HY2018 with Mercury maintaining a below-market churn position
>Reduced churn since brand launch has assisted growth in Mercury’s customer base
>Increased activity observed market-wide through last 12 months

CUSTOMER STRATEGY MAINTAINING BELOW-MARKET CHURN
16
Total switches
Trader switches
2
}
}
1
Switches which were initiated but not completed (inclusive of saves)
2
A trader switch is where a customer changes retailer without changing house
Source: Electricity Authority, EMI – Market share trends and switching breakdown
MARKET DYNAMICS
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
Switches

NATIONAL SWITCHING
Mercury
Mercury Brand
Net Switches
Prior 12mth Mercury Switches

POLITICAL CHANGE PRODUCES NEW REGULATORY FOCUS

MARKET DYNAMICS
17
>Electricity Price Review (EPR)
>Announced as part of coalition agreement with Labour/NZ First
following September 2017 general election with review reporting
early 2019
>Important to note New Zealand’s success in addressing the
energy trilemma recognised internationally
>New Zealand regarded as “a world leading example of a well-
functioning electricity market, which continues to work
effectively”
1
(IEA)
>Climate Change
>Government focused on transitioning NZ to a low carbon
economy by introducing legislation to tighten NZ’s emissions
reductions target, improve the ETS and establish an independent
Climate Commission
>Electric Vehicles supported through commitment to improve
charging infrastructure, convert government fleet by 2025 and
introduce fuel efficiency standards for carbon emissions
12
th
lowest residential
electricity price out of
33 OECD countries
3
rd
highest level of
renewable electricity
generation in the OECD
PRICING
RENEWABILITY
NZ ranks 3
rd
lowest out of 25 large
energy-consuming countries for
energy security risk
RELIABILITY
STABLE
REGULATORY
ENVIRONMENT
Source: Ministry of Business, Innovation & Employment, United States Chamber of Commerce
1
IEA Publications (2017), Energy Policies of IEA Countries: New Zealand 2017 Review,
International Energy Agency, p. 13

18
FINANCIAL SUMMARY

270
169
(131)
6
(6)
(3)
(4)
301
0
50
100
150
200
250
300
350
400
450
EBITDAF HY2017GenerationEnergy CostCFDsCustomer SalesOther RevenueOperating
Expenditure
EBITDAF HY2018
$m

Energy Margin up $38m
Improvement
Reduction
EBITDAF BRIDGE (HY2018 vs. HY2017)
19
>Energy margin up $38m
>327GWh more hydro generation than HY2017 with elevated wholesale prices impacting both generation and purchases
>Higher average energy price to customers (+1.1%); sales volume reduced due to lower commercial contract renewals
>Operating expenditure up $4m due to timing of spend, full year opex expected to be in line with FY2017
>Other revenue down largely due to carbon sales in HY2017
1
Energy cost excludes gas generation purchases and volume impacts of end user
sales, which are included within generation and customer sales respectively
2
Net CFD Energy Margin contribution (including End User Sales) was -$6m
FINANCIAL SUMMARY
1
2

69
60
79
59
114
59
183
33
31
13
2
56
0
50
100
150
200
250
300
201320142015201620172018F
$
m

Financial Year
CAPITAL EXPENDITURE
New investment
Stay-in-business
Stay-in-business guidance
RE-INVESTING IN OUR STATIONS AND SYSTEMS
20
>Capital expenditure of $59m (HY2017: $54m) reflects completion of geothermal drilling, technology platform
upgrades and ongoing hydro refurbishment
>FY2018 stay-in-business capital expenditure guidance remains at $115m
Stay-in-business capital expenditure for the period
FY2013 through FY2017 averages ~$80m
FINANCIAL SUMMARY

DIVIDENDS
21
>Focus remains on appropriate capital management
reflecting Government ownership constraints
>HY2018 fully-imputed interim dividend up 3.4% to 6.0
cents per share
>Interim dividend to be paid on 3 April 2018
>FY2018 dividend guidance of 15.0 cents per share
maintained
>Guidance represents 10
th
consecutive year of ordinary
dividend growth
0
5
10
15
20
25
20142015201620172018F

Cents per share

Financial Year
DIVIDEND
InterimFinalSpecialsOrdinary guidance
FINANCIAL SUMMARY

APPENDIX
22

DIVERSIFIED FUNDING PROFILE
23






>$200m of currently undrawn bank facilities, due to mature in August 2018, are in the process of being re-financed
>The average debt maturity profile for committed facilities was 8.1 years at 31 December 2017
>Interest costs elevated due to interest rate hedges put in place in 2008 during the company’s domestic geothermal
investment programme. These hedges roll off progressively from the end of FY2018 with a circa $20m annual cash
flow benefit from FY2019.
-
50
100
150
200
250
300
350
400
20182019202020212022202320242025202620272045
$m

Financial Year
DEBT MATURITIES AS AT 31 DECEMBER 2017
Domestic Wholesale BondsUS Private PlacementCapital BondDrawn Bank FacilitiesUndrawn Bank Facilities
APPENDIX

CAPITAL STRUCTURE WITH CAPACITY FOR GROWTH
24






1
Adjusted for S&P treatment of subordinated debt
>BBB+ rating is key reference point for dividend policy and an efficient and sustainable capital structure
>S&P re-affirmed Mercury’s credit rating of BBB+/stable on 11 December 2017
>One-notch upgrade given majority Crown ownership
>Key ratio for stand alone S&P credit rating bbb requires Debt / EBITDAF between 2.0x and 3.0x
>Capital management continues to be reviewed
>Debt/EBITDAF 1.8x at 30 June 2017
>Gearing level of circa 2.0x will be maintained to provide debt headroom due to Government minimum equity ownership requirement



31 December 2017 30 June 2017 30 June 2016 30 June 2015 30 June 2014
Net debt ($m)
1,068 1,038 1,068 1,082 1,031
Gearing ratio (%)
24.7% 23.9 24.4 24.5 24.3
Debt/EBITDAF (x)
N/A

1.8
1
2.0
1
2.0 2.1
APPENDIX

FOR FURTHER INFORMATION >> TIM THOMPSON | HEAD OF TREASURY & INVESTOR RELATIONS T. +64 275 173 470 E. INVESTOR@MERCURY.CO.NZ

---

OUR 2018 INTERIM REPORTMERCURY NZ LIMITED
>>>>

02 >> REPORT CARD
04 >> CHAIR AND CHIEF EXECUTIVE UPDATES
12 >> FINANCIAL COMMENTARY
15 >> INDEPENDENT REVIEW REPORT
18 >> FINANCIAL STATEMENTS
32 >> OTHER DISCLOSURES
32 >> SHAREHOLDER INFORMATION
33 >> DIRECTORY
ROAD MAP:

$301M
EBITDAF up $31m, achieved through favourable
hydrology and strong company-wide execution.
$132M
Net Profit up $19m due to improved EBITDAF partially
offset by higher depreciation and taxation expense.
6.0CPS
Fully-imputed interim dividend, up 3.4%, to be paid
on 3 April 2018.
>> FINANCIALS
REPORT
CARD.
02 // 03

5.5%
Mercury brand trader churn, materially below the
market average.
2
$100K
In total donated to ten charities nominated by
our people.
0.86
TRIFR
3
down from 1.05 in FY2017 with no
high-severity incidents.
1
st
Recognised as Best Enterprise Workplace in
New Zealand, reflecting high employee engagement.
4

95%
Geothermal availability maintained while
executing major maintenance plans.
2,694GWh
Record hydro generation enabled by strong inflows into
the Waikato Hydro catchment.
$60K
Savings for Panama Road School over the lifetime of our
solar install programme.
62%
Of Mercury brand customers are
‘highly satisfied’.
1
>> GROWING CUSTOMER LOYALTY
>> HIGH PERFORMANCE TEAMS
>> ENHANCED NATURAL RESOURCES
>> STRONGER TOGETHER
1 Monthly survey of residential customers for the six months to 31 December.
2 12 monthly rolling trader churn as at 31 December.
3 Total Recordable Injury Frequency Rate per 200,000 hours;
includes onsite employees and contractors.
4 IBM Best Workplace Awards 2017.

‘ WHAT PLEASES ME
MOST IS MERCURY’S
UNDERLYING
PERFORMANCE AND
THE CONTRIBUTION
OF MERCURY
EMPLOYEES AND
MANAGEMENT ABOVE
AND BEYOND NATURE’S
INFLUENCE.
’
>> JOAN WITHERS
CHAIR
CHAIR AND
CHIEF EXECUTIVE
UPDATES.
04 // 05

‘ DURING THE HALF
YEAR WE HAVE
TAKEN MEASURES
TO REMOVE
COMPLEXITY FROM
THE BUSINESS IN
ORDER TO IMPROVE
EFFICIENCY AND
EFFECTIVENESS
FOR THE BENEFIT
OF CUSTOMERS
AND YOU, OUR
OWNERS.’
>> FRASER WHINERAY
CHIEF EXECUTIVE

This result is strong, however weather
is fickle. What pleases me most is
Mercury’s underlying performance and
the contribution of Mercury employees
and management above and beyond
nature’s influence.
Mercury has recently received a number
of accolades including two major
marketing awards and was named Best
Enterprise Workplace (750+ employees)
in the IBM Best Workplaces Awards.
These things don’t happen by accident.
Instead it reflects the great work of
Mercury’s people, which I acknowledge
on behalf of the Board.
The level of engagement evident in our
people was demonstrated at Mercury’s
2017 Annual Shareholders’ Meeting.
There I saw employees from all parts
of our business interacting with many
of you, and your Board, in such a
confident way. It was a telling example
to me of the spirit and positive culture
within the company, and the alignment
our people have with Mercury’s mission
and purpose.
During the period in review, New Zealand
had a change of government. Mercury
is 51% owned by the Crown, meaning
it is both a respected owner and also a key
stakeholder due to Mercury’s contribution
to the wider energy sector. As a Board, we
acknowledge the change in government
and the new leadership for the country.
We look forward to Mercury’s ongoing
collaboration with all political parties.
The opportunity we have is to build on the
current contribution to the country from
this globally unique sector in order to
secure New Zealand’s energy freedom.
FINANCIAL RESULTS
Mercury’s earnings uplift to
$301 million from $270 million in the
prior corresponding period was driven
by North Island inflows leading to
record hydro generation of 2,694GWh,
up 14%. Our hydro inflows typically
have a low correlation with South
Island inflows. South Island inflows
were below average which supported
above average wholesale prices.
Stay-in-business capital expenditure
increased to $59 million in HY2018
from $54 million in HY2017 due to the
completion of technology upgrade projects
and geothermal maintenance plans that
Fraser summarises in his update.
Through the period, high geothermal
availability was maintained at 95%.
Operating expenditure was up $4 million
due to phasing of activity in the prior
year. Full year operating expenditure is
expected to be in line with FY2017,
consistent with the prior four years. Other
income of $21 million compared with
$24 million in the same period last year
largely due to carbon sales in HY2017.
GUIDANCE
Mercury’s FY2018 EBITDAF guidance is
$530 million subject to any material
events, significant one-off expenses or
other unforeseeable circumstances
including hydrological conditions.
FY2018 stay-in-business capital
expenditure guidance remains at
$115 million.
The full year ordinary dividend
guidance remains at 15.0 cents per
share (cps), a 2.7% increase on FY2017.
INTERIM DIVIDEND
Your Board remains focused on
appropriate capital management.
I am pleased to announce a fully-
imputed interim dividend of 6.0 cps to
our 85,000 owners including the Crown.
The dividend will be paid on 3 April
2018. This represents an increase of
3.4% on the FY2017 interim dividend.
BOARD COMPOSITION
Scott St John joined the Board in
September, with his appointment
approved at our Annual Shareholders’
Meeting. Scott’s capital markets
background, and his broad commercial
experience, adds to the Board’s
collective skills.
We continue to pay close attention to
ensuring we have the right mix of skills,
CHAIR’S UPDATE.
It is my pleasure to report to our owners on Mercury’s
performance for the half year ended 31 December 2017,
featuring record earnings (EBITDAF) driven by favourable
North Island rainfall supporting record hydro generation.
06 // 07

appropriate diversity, director rotation
and succession planning. The Board will
undertake a formal externally facilitated
performance review before the end of
the financial year.
Nicky Ashton completed her 18-month
term as a Future Director as part of
the Institute of Directors’ programme
to develop the next generation of
New Zealand’s governance capability.
I greatly enjoyed working with Nicky.
The Board valued her contribution
and wishes her well in her governance
career. We look forward to continuing
our association with this programme
and aim to announce another Future
Director appointment before the end
of the financial year.
SKILLS DEVELOPMENT/
GOVERNANCE TRENDS
Your Board continues to develop its
skillset and knowledge in order to stay
across emerging opportunities and to
enable it to work with management in
developing value enhancing strategies.
In the half year your Board and
management combined for a valuable
session with the Cambridge Institute for
Sustainability Leadership, discussing
global sustainability opportunities and
also the significant impacts of climate
change on businesses and society.
Corporate social responsibility
is an increasing area of focus for many
investors. Mercury has always been
keenly aware of the importance of
having a licence to operate by making
a positive contribution to society.
We achieve this through our stewardship
of our assets and our guardianship of
the environment we operate in.
Larry Fink, CEO of BlackRock Inc
(a $US6 trillion fund), writes annually
to CEOs of companies BlackRock
invests in. In his just-received 2018
letter he says,
“Companies must ask
themselves: What role do we play in
the community? How are we managing
our impact on the environment? Are
we working to create a diverse workforce?
Are we adapting to technological
change? Are we providing the retraining
and opportunities that our employees
and our business will need to adjust to
an increasingly automated world? Are
we using behavioural finance and other
tools to prepare workers for retirement,
so that they invest in a way that will
help them achieve their goals?”
These questions are being asked
by many investors, and companies
like Mercury are responding to the
challenge to create long term value
for our owners whilst working to
serve our diverse stakeholders.
REPORTING
Mercury’s 2017 Annual Report
reflected significant progress in telling
our story through the framework of
the Global Reporting Initiative and
Integrated Reporting standards. I have
received excellent feedback on this
and we will continue to follow this path
in our 2018 Annual Report.
CONCLUSION
The first half of the financial year has
been one of continued momentum for
Mercury. I congratulate the management
team, led strongly by our Chief Executive
Fraser Whineray, for its focus on
executing its strategy passionately and
well. I am pleased to see work
progressing on developing high
performance teams.
On behalf of the Board, I look forward
to a solid second half of the year that
builds on the platform that has been
established, and reporting to you again
in August 2018.
>> JOAN WITHERS, CHAIR
I look forward to a
solid second half of
the year that builds on
the platform that has
been established.

Our focus on customer loyalty and
the wellbeing of our people continues,
and this has been reflected in external
acknowledgement touched on by
Joan in the Chair’s report.
At the same time favourable hydro
conditions and astute management
of the portfolio have boosted earnings,
leading to a record half year financial
outcome.
This result, in a very dynamic and
competitive sector, puts Mercury in
a solid position for the full year.
PROGRAMME OF WORK
During the half year we have taken
measures to remove complexity from the
business in order to improve efficiency
and effectiveness for the benefit of
customers and you, our owners.
As signalled, our core SAP IT platform,
which supports many of our customer
interactions as well as behind-the-
scenes processing, was completely
upgraded in November, with disruption
kept to an absolute minimum.
The upgrade provides Mercury with the
latest database technology, in the ‘cloud’.
As a result, some processes which took
days to complete now take hours, and
some processes that took hours now
take minutes. More than 200 people
worked on the project and I would like
to acknowledge their smooth completion
of this upgrade.
Mercury has also upgraded our primary
asset management system, Maximo, that
our generation and maintenance teams
use every day. Our teams are already
seeing benefits from the transition.
OUR CUSTOMERS
In our 2017 Annual Report, and again
at our Annual Shareholders’ Meeting in
November, Mercury outlined its customer
promises to inspire, reward and make
things easy.
Mercury’s relative customer churn
continues to be materially below
market levels through our focus on
loyalty. Around 150,000 of our
customers now enjoy rewards through
membership of the Airpoints
TM

programme, for example, up from nearly
100,000 at HY2017. There is more to be
executed against our customer promises
over the coming year.
We are pleased to have been chosen
for a number of awards in the first
half of the financial year. These included
two major marketing awards for the
effectiveness of our brand change and
international recognition for our online
annual reporting. We were also
recognised for our focus on customers,
with eight honours for Mercury people
CHIEF EXECUTIVE’S
UPDATE.
Operational momentum has been strong for Mercury in the
first half of the 2018 financial year. Your company has made
good progress towards delivering the programme of work
outlined in our 2017 Annual Report. I acknowledge the
diligence and dedication of everyone at Mercury for their
contribution to the company’s progress.
and teams at New Zealand’s premier
event for contact centres.
Privacy, particularly related to the
potential misuse of information,
is a concern for our customers, and
protecting our customers’ privacy
is an ongoing priority for us.
I commend the great work done
by the Electricity Retailers Association
(ERANZ) to develop guidelines for
data use and sharing that should
help allay consumer fears of misuse.
Much can be determined about
household patterns of behaviour
through detailed energy consumption
data. This is why it is appropriate that
there are robust data privacy measures
in place. ERANZ has delivered a
strong framework to ensure that
consumption data from smart meters
can be maximised for the benefit of
consumers while consumer privacy
interests are not compromised.
Mercury launched a refreshed e-bike
marketing campaign as we work to
inspire New Zealanders to enjoy
energy in more wonderful ways.
Ownership of e-bikes is growing
strongly in New Zealand and our
research tracked a significant change
in consumer e-bike purchase intentions
coinciding with our promotions. It is
an exciting community to be a part of.
08 // 09

ELECTRIC VEHICLES
Mercury will continue to promote
the benefits of powering vehicles of
all sizes with electricity.
Mercury has worked with other
businesses and the government since
2014 to create an environment ready
for wider electric vehicle (EV) uptake.
We committed to our own fleet transition
and were able to announce at our 2017
Annual Shareholders’ Meeting that we
had reached our goal – representing 77
vehicles in total – one year ahead of target.
In November Mercury became one of the
first New Zealand businesses to sign up
to the global EV100 initiative to transition
business fleets to EVs.
It is now time to creatively promote EVs
to a wider audience through the Mercury
brand. I look forward to reporting more
on this in our 2018 Annual Report.
We are pleased to see the success
of the government’s co-funding
model for electric transport innovations.
It is particularly exciting to see the
number of initiatives supported that
relate to the electrification of heavy
transport. For New Zealand, where so
much of our fossil fuel use is in the
heavy transport sector, this could be
game-changing and take us more
quickly towards energy freedom.
In November we released data showing
how consumers were actively adjusting
their EV charging behaviour to off-peak
times in response to incentives. Though
early days, it demonstrates that network
control of EV charging is not necessary.
OUR PEOPLE AND THEIR
WELLBEING
‘Zero harm’ will always be a goal we
pursue relentlessly. We implemented a
new safety awareness campaign across
our various sites and in the half year
there were no serious harm incidents.
Personal ownership of health, safety and
wellbeing is increasingly evident. Our
utilisation of the SynergiLife app to
quickly report risks, and take action to
remove and manage them, has been
strong. Around 600 events were logged
through this system in the six months to
31 December.
Mercury continues to invest in the
development of its people, with ‘PowerUP’
and ‘StepUP’ induction and management
skills programmes well attended through
the first half of the year.
Announced in January, but reflecting
the strength of the spirit of our people
through 2017, Mercury was recognised
as the Best Enterprise Workplace
(750+ employees) in the 2017 IBM Best
Workplace Awards. This acknowledgement
benchmarks us against over 140
New Zealand businesses and is
determined by our employees’ responses
to rigorous survey questions related to
engagement. This is a real credit to the
way our people have chosen to come
together so strongly under our brand.
GENERATION
While rainfall patterns were favourable
for North Island hydro generation
through the first half of the financial
year, efficiency is no accident.
We had record hydro generation on
4 July 2017 with each of our 39 turbines
across our nine Waikato River stations
producing to their full potential. This
coincided with a cold spell across the
country so the generation was critical
to both supporting the needs of
consumers, and also for maximising
value to our shareholders.
Significant investment in hydro
equipment upgrades, carefully planned
maintenance and a committed team
are acknowledged for this ongoing
achievement. We are well advanced with
the major refurbishment of a second
generation unit at Whakamaru and the
first at Aratiatia.
Geothermal generation availability was
maintained at 95%. Contributing to that,
we had record generation at our Kawerau
geothermal station when we generated
2.58GWh on one day. This was achieved
through the work of our people
continuing to innovate in ways to
optimise the output of that station.
CONTACT
CENTRE
HONOURS
8
ELECTRIC VEHICLES
IN OUR FLEET
77
PEOPLE WORKED TO
UPGRADE OUR CORE
IT SYSTEM
200
+

We also successfully completed the
drilling of a new geothermal well at
Ngatamariki, which will be brought online
in the second half of the year
OUR COMMUNITIES
Our people’s contribution also extends
meaningfully into the communities
which Mercury is a part of.
To share some of the benefits of
Mercury’s favourable FY2017 hydro
inflows, $100,000 was shared with
10 charities nominated by our people.
Mercury also partnered with community
groups to install a solar system at
Auckland’s Panama Road School.
Mercury volunteers worked with teachers
as well as parents of pupils to ready the
school, while our Mercury Solar team ran
an exercise on health and safety in
conjunction with the install.
WATER
We welcome the conversation that is
underway in New Zealand on the nation’s
water: its quality and the uses to which it
is put. Mercury’s hydro stations do not
consume water, but we generate from it
through the force of gravity. Ten percent
of New Zealand’s electricity is generated
from our hydro stations along the
Waikato River and we are committed,
through partnerships, to be ultra
long-term guardians of this resource.
In August, we co-led a fact-finding tour
to Australia’s Murray-Darling catchment
along with a diverse group of
stakeholders. The initiative was called
Tukitahi (coming together as one).
I acknowledge the
mahi (work) of
everyone who came on
Tukitahi, including
respected iwi leaders from the Waikato
catchment along with commercial
enterprises, the Waikato Regional Council,
the Waikato River Authority, Watercare,
Fonterra, Genesis, Ministry for the
Environment, Federated Farmers and the
Sustainable Business Council.
We are very optimistic that the spiritual,
environmental and commercial health of
the
awa, New Zealand’s most important
river, can best, and only, be solved by a
collaborative group focused on long-
term common goals.
REGULATORY AND GOVERNMENT
Mercury welcomes the opportunity to
contribute to the government’s review into
retail electricity pricing. By international
benchmarks New Zealand may be the
only electricity market in the world that is
achieving to such a high standard across
measures of smart meter uptake,
renewability, reliability and pricing.
New Zealand’s electricity sector has
delivered these outcomes through a very
subtly designed, interconnected but
robust and strongly performing system.
By international
benchmarks New Zealand
may be the only electricity
market in the world that
is achieving to such a
high standard across
measures of smart meter
uptake, renewability,
reliability and pricing.
EACH TO 10 EMPLOYEE-
NOMINATED
CHARITIES
$10K
CUSTOMERS
EARNING AIRPOINTS
DOLLARS
TM

150K
GENERATED IN ONE
DAY AT KAWERAU,
A NEW RECORD
2.58
GWh
10 // 11

It is very important that any review takes
fully into account this interwoven fabric
before pulling on any particular threads.
The bigger opportunity is in recognising
our country’s strength in unsubsidised
renewable electricity. In that regard,
relative to other parts of the world,
New Zealand is in an extremely strong
position. However, we risk being
distracted. Mercury suggests the bold
approach is to focus on influencing
a fundamental transformation of the
economy through the establishment of
a renewable
energy target, rather than
constraining New Zealand’s future by
focusing on renewable
electricity targets.
I look forward to constructive
discussions with the government about
this opportunity.
SMART METERS
New Zealand’s electricity sector has low
barriers to entry assisted by open
participation in a liquid ASX futures
market. This supports price discovery
and independent generator and retailer
hedging. Along with our world-leading
smart meter rollout this underpins much
of the competition in New Zealand today.
What has been established in New
Zealand through the rollout of smart
meters is quite incredible. Mercury
accepts, however, that this capability has
also grown expectations. Mercury’s
smart meter business, Metrix, is working
hard to fulfil those expectations.
To achieve growth and deliver leading
solutions Metrix has been implementing
a complex overhaul of its IT systems.
We appreciate that delays to this
upgrade have caused some challenges
for several of Metrix’s customers who are
retailers. Metrix is doing everything it can
to accelerate the rollout of the systems
enhancements so that it can deliver
great outcomes for its electricity retailer
customers and, in turn, their consumers.
GROWTH
Mercury continues to pursue growth.
During the half year we investigated
the prospect of expanding our
metering capabilities through an
acquisition opportunity in Australia.
While ultimately unsuccessful with our
bid, the process itself helped refine our
view of relevant businesses that could
support our growth. We will continue to
explore other opportunities with a
strong commercial lens.
There are many more stories of our
achievements through the first half of
the year, including the announcement of
a trial of New Zealand’s first scalable
grid-connected Tesla battery at our
Research and Development Centre.
I encourage you to follow the news items
on our website www.mercury.co.nz; and
our LinkedIn, Facebook, Twitter and
Instagram pages to stay across the great
community work and other areas of
collaboration, leadership and innovation
we are involved in.
CLOSING REMARKS
In summary, it’s an exciting time for the
global energy sector and for Mercury.
The momentum established through our
rebrand in FY2017, and the leadership
and high performance work we are doing
with our people, continued in the first
half of the year.
We acknowledge the choice that our
customers, our people, our partners
and our owners all make in engaging
with us, and thank you all for being part
of our story.
Together we are Mercury.
Energy made wonderful.
Nga mihi nui ki a koutou katoa.
>> FRASER WHINERAY, CHIEF EXECUTIVE

0
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HALF YEAR
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>> FIGURE 1: ENERGY MARGIN
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>> FIGURE 2: OPERATING COSTS
FINANCIAL
COMMENTARY.
Mercury’s financial performance for the six months to 31 December 2017 is a record interim
result, with EBITDAF of $301 million up $31 million on last year’s previous record. Performance
was strong across the entire business, underpinned by the combination of record generation
and elevated wholesale market prices, supported by a lift in customer yields, a disciplined
focus on managing costs and strong execution of the planned work programme.
ENERGY MARGIN
1
Our energy margin of $387 million was $38 million higher than
HY2017 largely due to higher wholesale prices, caused by low
inflows into the South Island catchments, contrasting starkly
with wet conditions in the Waikato, resulting in record Mercury
hydro generation for the period (2,694 GWh, up 14% on HY2017
and 22% above average).
The ratio of average electricity purchase prices to average
generation prices (LWAP/GWAP, where a lower ratio is
favourable), increased relative to the same period last year from
1.04 to 1.07. This reflects the reduced generation flexibility
arising from higher volumes and larger wholesale price
locational differences across the country.
Our average energy price to customers was up (+1.1%)
to $113.58/MWh relative to the same period last year.
This reflects an increase in mass market yields, including
the costs associated with loyalty activity. These factors more
than offset the impact of commercial and industrial sales
contracted throughout the period, at lower prices than
achieved historically.
Mercury’s continued focus on growing customer loyalty by
rewarding, inspiring and making it easy for customers saw
annualised churn of 19.8% across all brands being better than
the market churn of 21.2%. The company’s focus on loyalty
contributed over the period to customer numbers increasing
by 1,000 to 393,000.
1 Energy Margin is a non-GAAP measure and is defined as sales less lines
charges, energy costs and other direct costs of sales, including metering
(see Note 4 of the Interim Financial Statements). Energy Margin provides
a measure that, unlike total revenue, accounts for the variability of the wholesale
spot price on our generation revenue and the broadly offsetting impact of
wholesale prices on the purchase cost of our customers’ electricity.
12 // 13

OTHER INCOME
Other income includes revenue earned by our metering
business, Metrix, operation and maintenance services provided
to third parties and revenue from our solar business, along with
other one-off or irregular occurring items. Our third party
revenue from Metrix continued to increase during the period
as smart meter deployment and services continued to grow.
The prior period also benefited from our decision last year to
sell down surplus carbon emission units for a gain of $5 million,
which was not repeated during the current period.
OPERATING COSTS
Operating costs represent our indirect costs of sales, including
salaries and wages, maintenance costs, and all other company
overheads. Operating costs were $4 million higher than HY2017,
reflecting a return to a more normalised split of spend across
the financial year. Full year operating costs are expected to
remain in line with the levels of the past four years.
OPERATING EARNINGS (EBITDAF
2
)
EBITDAF for the period was up $31 million or 11% versus HY2017,
primarily due to the movements in energy margin and mostly
due to higher hydro generation output combined with elevated
wholesale prices. While the company was able to capitalise on
elevated wholesale prices, our continued focus on executing our
core business plan, including our focus on growing customer
loyalty and strong regional partnerships, also contributed to this
strong result.
PROFIT FOR THE YEAR
Profit for the period represents the profit for the company
after taking into account EBITDAF, depreciation and
amortisation, the change in the fair value of financial
instruments, impairments, earnings of associates and joint
ventures, net interest costs, and the company’s tax expense.
Profit for the period increased by $19 million to $132 million
due to improved operating earnings, partially offset by higher
depreciation and taxation expenses versus the previous year.
UNDERLYING EARNINGS AFTER TAX
3
Underlying Earnings after tax increased by $20 million or
21% to $114 million also reflecting our increase in EBITDAF
performance.
NET CASH FLOWS FROM OPERATING ACTIVITIES
Net cash provided by operating activities is made up of the cash
flows from the sale of electricity and metering services, along
with the direct and indirect costs associated with their sale and
the cash costs of interest and taxes. Net cash flows from
operating activities increased by $21 million to $214 million, up
11% on HY2017, as a result of increased hydro electricity
generation, which was partially offset by a $25 million increase
in cash taxes. The increase in cash taxes was a result of lower
cash tax payments in HY2017 as a consequence of our decision
to prepay tax in FY2016 to maintain a positive imputation credit
account, thereby reducing HY2017 provisional tax obligations. In
addition, the company received a refund in HY2017 for overpaid
tax from prior years.
0
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>> FIGURE 3: EBITDAF
>> FIGURE 4:
UNDERLYING EARNINGS AFTER TAX
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HALF YEAR
2 EBITDAF is reported in the income statement of the Interim Financial
Statements and is a measure that allows comparison across the sector. EBITDAF
is defined as earnings before net interest expense, income tax, depreciation,
amortisation, change in fair value of financial instruments, impairments, and
equity accounted earnings.
3 Underlying earnings after tax is reported in Note 3 of the Interim Financial
Statements and is a non-GAAP measure representing net profit for the year
adjusted for one-off and/or infrequently occurring events exceeding $10 million
of net profit before tax, impairments, and any changes in the fair value of
derivative financial instruments. In contrast to net profit, the exclusion of these
items enables a comparison of the company’s underlying performance between
financial periods. The company has reported Underlying Earnings on this basis
for the last seven years.

BALANCE SHEET
Stay-in-business capital expenditure (SIB capex) represents
the capital expenditure we incur to maintain our assets in good
working order. SIB capex in HY2018 was $59 million. During the
period we successfully completed the implementation of our
SAP upgrade and transferred this platform into the cloud,
and our Maximo asset management system upgrade. We also
successfully completed the drilling of a new geothermal well at
Ngatamariki, which will be brought online in the second half of
the year and we are well advanced in the major refurbishment
of the second unit at Whakamaru and the first at Aratiatia.
The completion and embedding of Metrix’s new operating
platform remains challenging but we expect that it will be
providing improved service to our customers this financial year.
We expect full year SIB capex to be $115 million.
CAPITAL STRUCTURE AND DIVIDENDS
Our dividend policy gives due consideration to our working
capital requirements, medium term investment programme,
a sustainable capital structure and recognises a targeted
long-term credit rating of BBB+ assigned by S&P. Our balance
sheet remains strong at current gearing levels and reflects the
Government’s legislated minimum shareholding in our company
which complicates our ability to raise equity. We continue to
explore value enhancing opportunities which may require
additional borrowings to fund growth.
Our relatively high average interest rate of 8.6% on net
debt of $1,068 million reflects interest rate hedges put in
place in 2008, prior to the global financial crisis and the
subsequent decreases in interest rates, ahead of our significant
geothermal development programme. Most of these hedges
mature at the end of the 2018 financial year. From that time
the estimated post-tax cash flow benefit, at current rates, will
be approximately $20 million per annum. We are also in the
process of refinancing $200 million of bank facilities which
expire in August this year.
In line with our dividend policy to target a pay-out ratio of
70% to 85% of Free Cash Flow on average over time, a
fully-imputed 6.0 cents per share interim dividend has been
declared, payable on 3 April 2018. Full year ordinary dividend
guidance of 15.0 cents per share remains unchanged,
representing a 2.7% increase on FY2017.
>> FIGURE 6: INTERIM DECLARED DIVIDENDS
0
1
2
3
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HALF YEAR
Cents per shar
e
>> FIGURE 5: CAPITAL EXPENDITURE
HALF YEAR
$m
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14 // 15

INDEPENDENT REVIEW REPORT.
REVIEW REPORT TO THE SHAREHOLDERS OF MERCURY NZ LIMITED
We have reviewed the consolidated interim financial statements of Mercury NZ Limited (“the Company”) and its
subsidiaries (“the Group”) on pages 18 to 31, which comprise the consolidated balance sheet of the Group as at
31 December 2017, and the consolidated income statement, consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated cash flow statement of the Group for the six months
ended on that date, and a summary of significant accounting policies and other explanatory information.
This report is made solely to the Company’s shareholders, as a body. Our review has been undertaken so that we might
state to the Company’s shareholders those matters we are required to state to them in a review report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s shareholders as a body, for our review work, for this report, or for our findings.
DIRECTORS’ RESPONSIBILITIES
The directors are responsible for the preparation and fair presentation of consolidated interim financial statements which
comply with New Zealand Equivalent to International Accounting Standard 34
Interim Financial Reporting and for such
internal control as the directors determine is necessary to enable the preparation and fair presentation of the consolidated
interim financial statements that are free from material misstatement, whether due to fraud or error.
The directors are also responsible for the publication of the consolidated interim financial statements, whether in printed
or electronic form.
REVIEWER’S RESPONSIBILITIES
The Auditor-General is the auditor of the Group pursuant to section 5(1)(f) of the Public Audit Act 2001. Pursuant to
section 32 of the Public Audit Act 2001, the Auditor-General has appointed Simon O’Connor of Ernst & Young to carry out
the annual audit of the Group.
Our responsibility is to express a conclusion on the consolidated interim financial statements based on our review. We
conducted our review in accordance with New Zealand Standard on Review Engagements 2410
Review of Financial
Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410). NZ SRE 2410 requires us to conclude
whether anything has come to our attention that causes us to believe that the consolidated interim financial statements,
taken as a whole, are not prepared in all material respects, in accordance with New Zealand Equivalents to International
Accounting Standard 34
Interim Financial Reporting. As the auditor of Mercury NZ Limited, NZ SRE 2410 requires that we
comply with the ethical requirements relevant to the audit of the annual financial statements.
BASIS OF STATEMENT
A review of consolidated interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement.
The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance
with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on the
consolidated interim financial statements.
We did not evaluate the security and controls over the electronic presentation of the consolidated interim financial
statements.

In addition to this review and the audit of the annual financial statements of the Group, we are engaged to perform other
engagements in the area of payroll advisory services and tax compliance which are compatible with the independence
requirements of the Auditor-General, which incorporate the independence requirements of the External Reporting Board.
In addition, partners and staff of Ernst & Young may deal with the Group on arm’s length terms within the ordinary course
of trading activities of the Group. These services have not impaired our independence as auditor of the Company or Group.
Other than these engagements and arm’s length transactions, and in our capacity as auditor acting on behalf of the
Auditor-General, we have no relationship with, or interests in, the Company or Group.
CONCLUSION
Based on our review nothing has come to our attention that causes us to believe that the accompanying financial
statements, set out on pages 18 to 31, do not present fairly, in all material respects, the financial position of the Group as
at 31 December 2017 and its financial performance and cash flows for the six months ended on that date in accordance
with New Zealand Equivalent to International Accounting Standard 34
Interim Financial Reporting.
Our review was completed on 27 February 2018 and our findings are expressed as at that date.
>> SIMON O’CONNOR
ERNST & YOUNG
AUCKLAND, NEW ZEALAND
16 // 17

FINANCIAL
STATEMENTS.

CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Note
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Total revenue4958 796 1,597
Total expenses4(657)(526)(1,074)
EBITDAF
1
301 270 523
Depreciation and amortisation(96)(93)(189)
Change in the fair value of financial instruments24 26 31
Impairments - - (18)
Earnings of associates and joint ventures 1 2 6
Net interest expense4(46)(49)(95)
Profit before tax184 156 258
Tax expense(52)(43)(74)
Profit for the period attributable to owners of the parent132 113 184
Basic and diluted earnings per share (cents)9.6 8.2 13.4
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Profit for the period132 113 184
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Movement in asset revaluation reserve – – 55
Share of movements in associates’ and joint ventures’ reserves 1 1 (14)
Tax effect – – (15)
Items that may be reclassified subsequently to profit or loss
Movement in cash flow hedge reserve 11 42 36
Movement in other reserves – 1 11
Tax effect (3)(12)(11)
Other comprehensive income/(loss) for the period, net of taxation9 32 62
Total comprehensive income/(loss) for the period attributable to owners of the parent141 145 246
1 EBITDAF: Earnings before net interest expense, income tax, depreciation, amortisation, change in fair value of financial instruments, impairments and equity
accounted earnings
The accompanying notes form an integral part of these financial statements.
18 // 19

CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2017
Note
Unaudited
31 Dec 2017
$M
Unaudited
31 Dec 2016
$M
Audited
30 Jun 2017
$M
SHAREHOLDERS’ EQUITY
Issued capital 378378378
Treasury shares(51)(52)(51)
Reserves2,9322,9612,981
Total shareholders’ equity3,2593,2873,308
ASSETS
Current assets
Cash and cash equivalents472730
Receivables202159240
Inventories374539
Derivative financial instruments6242418
Total current assets310255327
Non-current assets
Property, plant and equipment75,3785,4075,422
Intangible assets675053
Investment and advances to associates8767776
Investment in joint ventures8–14–
Advances798
Receivables11–
Derivative financial instruments6106139111
Total non-current assets5,6355,6975,670
Total assets5,9455,9525,997
LIABILITIES
Current liabilities
Payables and accruals187130202
Provisions411
Borrowings9130983
Derivative financial instruments6472149
Taxation payable22723
Total current liabilities390168358
Non-current liabilities
Payables and accruals3–4
Provisions525353
Derivative financial instruments6102186139
Borrowings91,0301,1531,024
Deferred tax1,1091,1051,111
Total non-current liabilities2,2962,4972,331
Total liabilities2,6862,6652,689
Net assets3,2593,2873,308
For and on behalf of the Board of Directors who authorised the issue of the Financial Statements on 27 February 2018.

Joan Withers Keith Smith
Chair Director
27 February 2018 27 February 2018
The accompanying notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Issued
capital
$M
Retained
earnings
$M
Asset
revaluation
reserve
$M
Cash flow
hedge
reserve
$M
Other
reserves
$M
Total equity
$M
Balance as at 1 July 20163782532,821(76)(61)3,315
Movement in cash flow hedge reserve, net of taxation–––30–30
Movements in other reserves––––11
Share of movements in associates’ and joint ventures’ reserves–––1–1
Other comprehensive income–––31132
Net profit for the period–113–––113
Total comprehensive loss for the period–113–311145
Dividend–(173)–––(173)
Balance as at 31 December 20163781932,821(45)(60)3,287
Balance as at 1 January 20173781932,821(45)(60)3,287
Movement in asset revaluation reserve, net of taxation––38––38
Movement in cash flow hedge reserve, net of taxation–––(5)–(5)
Movements in other reserves––––1010
Share of movements in associates’ and joint ventures’ reserves––(12)(3)–(15)
Release of asset revaluation reserve, net of taxation––2––2
Other comprehensive income––28(8)1030
Net profit for the period–71–––71
Total comprehensive income for the period–7128(8)10101
Dividend–(80)–––(80)
Balance as at 30 June 20173781842,849(53)(50)3,308
Balance as at 1 July 20173781842,849(53)(50)3,308
Movement in cash flow hedge reserve, net of taxation–––8–8
Share of movements in associates’ and joint ventures’ reserves–––1–1
Other comprehensive income–––9–9
Net profit for the period–132–––132
Total comprehensive income for the period–132–9–141
Dividend–(190)–––(190)
Balance as at 31 December 20173781262,849(44)(50)3,259
The accompanying notes form an integral part of these financial statements.
20 // 21

CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers9938261,538
Payments to suppliers and employees(677)(554)(1,022)
Interest received112
Interest paid(46)(48)(95)
Taxes paid(57)(32)(52)
Net cash provided by operating activities214193371
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment(34)(53)(103)
Acquisition of intangibles(23)(4)(20)
Disposal of property, plant and equipment, including land1––
Disposal of intangibles–1926
Distributions received from associates and joint ventures and advances to joint venture
partner repaid358
Net cash used in investing activities(53)(33)(89)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans4611475
Repayment of loans–(120)(120)
Dividends paid(190)(173)(253)
Net cash used in financing activities(144)(179)(298)
Net increase (decrease) in cash and cash equivalents held17(19)(16)
Cash and cash equivalents at the beginning of the period304646
Cash and cash equivalents at the end of the period472730
Cash balance comprises:
Cash balance at the end of the period472730
The accompanying notes form an integral part of these financial statements.

NOTE 1. ACCOUNTING POLICIES
(1) Reporting entity
Mercury NZ Limited (the “Company”) is incorporated in New Zealand, registered under the Companies Act 1993,
an FMC reporting entity under the Financial Markets Conduct Act 2013, and is listed on the NZSX and ASX.
The consolidated interim financial statements (the “Group financial statements”) are for Mercury NZ Limited Group (“Group”).
The Group financial statements comprise the Company and its subsidiaries, including its investments in associates and
interests in joint arrangements.
The liabilities of the Group are not guaranteed in any way by the Government or by any other shareholder.
(2) Basis of preparation
The Group financial statements have been prepared in accordance with the Financial Reporting Act 2013, the Companies
Act 1993 and in accordance with New Zealand equivalent to International Accounting Standard 34 - Interim Financial
Reporting (“NZ IAS 34”). In complying with NZ IAS 34, these statements comply with International Accounting Standard 34
- Interim Financial Reporting.
These Group financial statements, including the accounting policies adopted, do not include all the information and
disclosures required in the annual financial statements. Consequently, these Group financial statements should be read
in conjunction with the Group’s annual financial statements for the year ended 30 June 2017.
The energy business operates in an environment that is dependent on weather as one of the key drivers of supply and
demand. Fluctuations in seasonal weather patterns, particularly over the short-term, can have a positive or negative effect
on financial performance. It is not possible to consistently predict this seasonality and some variability is common.
The preparation of financial statements requires judgements and estimates that impact the application of policies and
the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.
Certain comparatives have been restated where needed to conform to current year classification and presentation.
NOTE 2. SEGMENT REPORTING
Identification of reportable segments
The operating segments are identified by management based on the nature of the products and services provided. Discrete
financial information about each of these operating segments is reported to the Chief Executive, being the chief operating
decision-maker, on at least a monthly basis, who assesses the performance of the operating segments on a measure of EBITDAF.
Segment EBITDAF represents profit earned by each segment exclusive of any allocation of central administration costs, share of
earnings of associates, change in fair value of financial instruments, depreciation, amortisation, impairments, finance costs and
tax expense. Operating segments are aggregated into reportable segments only if they share similar economic characteristics.
Types of products and services
Energy Markets
The energy markets segment encompasses activity associated with the electricity production, electricity trading, and sale of
energy and related services and products to customers, and generation development activities.
Other Segments
Other operating segments that are not considered to be reporting segments are grouped together as “Other Segments”.
Activities include metering, sales of solar equipment, and international geothermal development and operations.
Unallocated
Represents corporate support services and related elimination adjustments.
Inter-segment
Transactions between segments are carried out on normal commercial terms and represent charges by Other Segments to
Energy Markets.
22 // 23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

Segment results
Six months ended 31 December 2017 (unaudited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
To t a l
$M
Total segment revenue944 27 –(13)958
Direct costs(563) (3)–13 (553)
Other operating expenses(65)(9)(30) – (104)
Segment EBITDAF316 15 (30) – 301
Six months ended 31 December 2016 (unaudited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
To t a l
$M
Total segment revenue78326 1 (14)796
Direct costs(437) (3) – 14 (426)
Other operating expenses(62)(8)(30) – (100)
Segment EBITDAF284 15 (29) – 270
Twelve months to 30 June 2017 (audited)
Energy
Markets
$M
Other
Segments
$M
Unallocated
$M
Inter–
segment
$M
To t a l
$M
Total segment revenue1,571 52 1 (27)1,597
Direct costs(881) (6) – 27 (860)
Other operating expenses(133)(19)(62) – (214)
Segment EBITDAF557 27 (61) – 523
At 30 June 2017, the Group adjusted historic other operating expenses of Other Segments to be reflected in direct costs.
NOTE 3. NON STATUTORY MEASURE – UNDERLYING EARNINGS
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Profit for the period132 113 184
Change in the fair value of financial instruments(24)(26)(31)
Equity accounted share of the change in the fair value of financial instruments of associate entities (1) – (4)
Impairments – – 18
Adjustments before tax expense(25)(26)(17)
Tax expense7 7 9
Adjustments after tax expense(18)(19)(8)
Underlying earnings after tax114 94 176
Tax has been applied on all taxable adjustments at 28%.
NOTE 2. SEGMENT REPORTING (CONTINUED)

NOTE 4. OTHER INCOME STATEMENT DISCLOSURES
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Sales 937 772 1,552
Other revenue 21 24 45
Total revenue 958 796 1,597
Energy costs (290)(167)(358)
Line charges (231)(227)(440)
Other direct cost of sales, excluding third party metering (16)(17)(32)
Direct costs of other revenue (3) (3)(6)
Third party metering (13)(12)(24)
Employee compensation and benefits (43)(41)(83)
Maintenance expenses (20)(18)(48)
Other expenses (41)(41)(83)
Total expenses (657)(526)(1,074)
Interest expense (47) (50) (97)
Interest income 1 1 2
Net interest expense (46)(49)(95)
NOTE 5. SHARE CAPITAL AND DISTRIBUTION
The share capital of the Company is represented by 1,400,012,517 ordinary shares (30 June 2017: 1,400,012,517) issued and
fully paid. These shares do not have a par value, have equal voting rights and share equally in dividends and any surplus on
winding up.
Unaudited
31 Dec 2017
Number of
shares (M)
Unaudited
31 Dec 2017
$M
Unaudited
31 Dec 2016
Number of
shares (M)
Unaudited
31 Dec 2016
$M
Audited
30 Jun 2017
Number of
shares (M)
Audited
30 Jun 2017
$M
Treasury shares
Balance at the beginning of the period 24 51 24 52 24 52
Disposal of treasury shares – – – – – (1)
Balance at the end of the period 24 51 24 52 24 51
24 // 25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

Dividends declared and paid
Cents per
share
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Final dividend for 2016 8.6 – 118 118
Special dividend – paid September 2016 4.0 – 55 55
Interim dividend for 2017 5.8 – – 80
Final dividend for 2017 8.8 121 – –
Special dividend – paid September 2017 5.0 69 – –
190 173 253
NOTE 6. FINANCIAL INSTRUMENTS
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to proactively
manage these risks with the aim of protecting shareholder wealth. Exposure to price, credit, foreign exchange, liquidity and
interest rate risks arise in the normal course of the Group’s business. The Group’s principal financial instruments comprise
cash and cash equivalents, trade receivables and accruals (not prepayments), advances, payables and accruals, borrowings
and derivative financial instruments. Further information on the identified risks can be found within note 14 of the Group’s
annual financial statements for the year ended 30 June 2017.
Fair Values
The carrying amount of financial assets and liabilities recorded in the financial statements approximates their fair values
except for: (i) the Fixed Rate Bonds, the Floating Rate Bonds and the US Private Placement, the fair values for which have been
calculated at $140 million (30 June 2017: $140 million), $292 million (30 June 2017: $287 million) and $294 million (30 June
2017: $289 million) respectively; and (ii) the Capital Bonds, the fair value for which has been calculated at $318 million (30
June 2017: $317 million). Fair values are based on quoted market prices and inputs for each bond issue. Refer to note 9 which
outlines the values of each of these instruments.
Valuation techniques
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
• Level 1 - the fair value is calculated using quoted prices in active markets;
• Level 2 - the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly (as prices) or indirectly (derived from prices); and
• Level 3 - the fair value is estimated using inputs that are not based on observable market data.
As at 31 December 2017 all of the Group’s financial instruments carried at fair value were categorised as level 2, except for
electricity price derivatives. Electricity price derivatives assets of $14 million were categorised as level 1 (30 June 2017:
$8 million) and $57 million were categorised as level 3 (30 June 2017: $63 million). Further information on the identified risks
can be found within note 14 of the Group’s annual financial statements for the year ended 30 June 2017. Electricity price
derivative liabilities of $6 million were categorised as level 1 (30 June 2017: $6 million) and $34 million were categorised as
level 3 (30 June 2017: $55 million).
Financial instruments that use a valuation technique with only observable market inputs, or unobservable inputs that are not
significant to the overall valuation, include interest rate derivatives and foreign exchange rate derivatives not traded on a
recognised exchange.
NOTE 5. SHARE CAPITAL AND DISTRIBUTION (CONTINUED)

Financial instruments that use a valuation technique which includes non-market observable data include non-exchange
traded electricity contracts which are valued using a discounted cash flow methodology using a combination of ASX market
prices for the first four years, combined with management’s internal view of forward prices for the remainder of the contract’s
term. Management’s internal view of forward prices incorporates a minimum price of $66/MWh and a maximum price of
$103/MWh (30 June 2017: a minimum price of $70/MWh and a maximum price of $104/MWh) over the period in question
(in real terms) and is determined by a demand supply based fundamental model which takes account of current hydrological
conditions, future inflows, an assessment of thermal fuel costs, anticipated demand and supply conditions and future
committed generation capacity.
Where the fair value of a derivative is calculated as the present value of the estimated future cash flows of the instrument
there are two key inputs being used; the forward price curve and the discount rate. Where the derivative is an option, then the
volatility of the forward price is another key variable. The selection of the inputs requires significant judgement, and therefore
there is a range of reasonably possible assumptions in respect of these inputs that could be used in estimating the fair values
of these derivatives. Maximum use is made of observable market data when selecting inputs and developing assumptions for
the valuation technique.
Reconciliation of Level 3 fair value movements
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Opening balance 7 (12) (12)
New contracts – 3 –
Matured contracts – (1) (1)
Gains and losses
Through the income statement 1 5 (4)
Through other comprehensive income 15 12 24
Closing balance23 7 7
Deferred ‘inception’ gains/(losses)
There is an assumption that when derivative contracts are entered into on an arm’s length basis, fair value at inception would
be zero. The contract price of non exchange traded electricity derivative contracts are agreed on a bilateral basis, the pricing
for which may differ from the prevailing derived market price curve for a variety of reasons. In these circumstances an
inception adjustment is made to bring the initial fair value of the contract to zero at inception. This inception value is
amortised over the life of the contract by adjusting the future price path used to determine the fair value of the derivatives by
a constant amount to return the initial fair value to zero.
The table below details the movements in inception value gains/(losses) included in the fair value of derivative financial assets
and liabilities:
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Opening deferred inception (losses)/gains (16) (14) (14)
Deferred inception (losses)/gains on new hedges (2) 4 3
Deferred inception (losses)/gains realised during the period (3) (1) (5)
Closing inception (losses)/gains (21) (11) (16)
NOTE 6. FINANCIAL INSTRUMENTS (CONTINUED)
26 // 27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Opening net book value 5,422 5,440 5,440
Additions, including transfers from capital work in progress 42 53 110
Net revaluation movement – – 52
Impairments – – (4)
Depreciation charge for the period (86) (86) (176)
Closing net book value 5,378 5,407 5,422
NOTE 8. INVESTMENT AND ADVANCES TO ASSOCIATES AND JOINT ARRANGEMENTS
(JOINT VENTURES AND JOINT OPERATIONS)
Investments include:
Interest Held
Name of entityPrincipal activityType
Unaudited
31 Dec
2017
Unaudited
31 Dec
2016
Audited
30 June
2017Country
TPC Holdings LimitedInvestment holdingAssociate25.00%25.00%25.00%New Zealand
RotokawaSteamfield operationJoint Operation64.80%64.80%64.80%New Zealand
Nga Awa PuruaElectricity generationJoint Operation65.00%65.00%65.00%New Zealand
Energy Source LLCInvestment holdingJoint Venture20.86%20.86%20.86%United States
Hudson Ranch I Holdings LLCElectricity generationJoint Venture75.00%75.00%75.00%United States
Associates:Joint Ventures:
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Balance at the beginning of the period76 77 77 – 15 15
Share of earnings 1 2 6 – – –
Share of movement in other comprehensive income 1 1 (2) – – (12)
Distributions received during the period (2) (3) (5) – (1) (2)
Impaired advance to joint venture – – – – – (1)
Balance at the end of the period76 77 76 – 14 –

NOTE 9. BORROWINGS
Borrowing
Currency
DenominationMaturityCoupon
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Bank facilitiesNZDVariousFloating21 114 –
Commercial paper programmeNZD< 3 monthsFloating100 – 75
Wholesale bondsNZDMar-20195.03%76 76 76
Wholesale bondsNZDFeb-20208.21%31 31 31
USPP – US$125mUSDDec-20204.25%164 164 164
Wholesale / Credit wrapperNZDSep-2021Floating301 301 301
USPP – US$30mUSDDec-20224.35%39 39 39
Wholesale bondsNZDMar-20235.79%25 25 25
USPP – US$45mUSDDec-20254.60%58 58 58
Capital BondsNZDJul-20446.90%305 305 305
Deferred financing costs(5) (6) (6)
Fair value adjustments45 55 39
Carrying value of loans1,160 1,162 1,107
Current 130 9 83
Non-current1,030 1,153 1,024
1,160 1,162 1,107
The Company has $350 million of committed and unsecured bank loan facilities, of which $200 million expires in August
2018, $50 million expires in September 2019 and a rolling bank loan of $100 million currently expiring in June 2019.
The Company has a $200 million Commercial Paper programme which is fully backed by committed and undrawn bank
facilities. Notes issued under the programme are short-term money market instruments, unsecured and unsubordinated and
targeted at professional investors. The programme is rated A2 by Standard & Poor’s.
28 // 29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

NOTE 10. RELATED PARTY TRANSACTIONS
Ultimate shareholder
The majority shareholder of Mercury NZ Limited is the Government. All transactions with the Government and other entities
wholly or partly owned by the Government are on normal commercial terms. Transactions cover a variety of services including
sales and trading of energy, postal, travel and tax.
Transactions with related parties
Mercury NZ Limited has investments in subsidiaries, associates and joint arrangements, all of which are considered related parties.
As these are consolidated financial statements, transactions between related parties within the Group have been eliminated.
Consequently, only those transactions between entities which have some owners external to the Group have been reported below:
Transaction Value
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Associates
Management fees and service agreements received 10 8 12
Energy contract settlements (paid) received 4 (1) (1)
Joint operations
Management fees and service agreements received 6 6 15
Energy contract settlements (paid) received 2 (5) (9)
Interest income – 1 1
Payments for inventory – – (1)
Transaction Value
Unaudited
6 Months
31 Dec 2017
$000
Unaudited
6 Months
31 Dec 2016
$000
Audited
12 Months
30 Jun 2017
$000
Key management personnel compensation (paid and payable) comprised:
Directors’ fees 470 456 885
Benefits for the Chief Executive and Senior Management:
Salary and other short-term benefits 3,191 3,216 6,175
Share-based payments 293 200 430
3,954 3,872 7,4 9 0
Further information on the terms and conditions of these related party transactions can be found in note 17 of the Group’s
annual financial statements for the year ended 30 June 2017.

Other transactions with key management personnel
Key management personnel are those people with responsibility and authority for planning, directing and controlling the
activities of the Group. Key management personnel for the Group are considered to be the Directors and Senior Management.
Directors and employees of the Group deal with Mercury NZ Limited as electricity consumers on normal terms and conditions,
with staff discounts for employees, within the ordinary course of trading activities. A number of key management personnel
also provide directorship services to other third party entities. A number of these entities transacted with the Group, in all
circumstances on normal commercial terms during the reporting period.
A number of key management personnel provide directorship services to direct subsidiaries and other third party entities as
part of their employment without receiving any additional remuneration. Again, a number of these entities transacted with the
Group, in all circumstances on normal commercial terms in the reporting period.
The Group purchases directors and officers insurance for the benefit of key management personnel in relation to the services
they provide to the Group.
NOTE 11. COMMITMENTS AND CONTINGENCIES
Unaudited
6 Months
31 Dec 2017
$M
Unaudited
6 Months
31 Dec 2016
$M
Audited
12 Months
30 Jun 2017
$M
Commitments
Capital115 154 128
Operating leases108 110 110
Other operating commitments82 84 80
Capital commitments include both commitments to purchase property, plant and equipment as well as intangible
commitments. Intangible commitments includes commitments to purchase emissions units. In the event the New Zealand
emissions trading scheme (NZ ETS) is terminated, the forward purchase agreements for the acquisition of emissions units
which cover a 12 year period will also terminate.
Operating leases are of a rental nature and are on normal commercial terms and conditions. The majority of the lease commitments
are for building accommodation, the leases for which have remaining terms of between 1 and 14 years and include an allowance
for either annual, biennial or triennial reviews. The remainder of the operating leases relate to vehicles, plant and equipment.
NOTE 10. RELATED PARTY TRANSACTIONS (CONTINUED)
30 // 31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

NOTE 11. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Contingencies
The Group has interests in land, fresh water and geothermal resources that are subject to claims against the Government. In 2014
the Supreme Court dismissed claimants’ action for a declaration that the Government holds those parts of the Waikato River bed
which adjoin former Pouakani land on trust for the Pouakani people. The Supreme Court left open the possibility of further
litigation in respect of ownership of land currently held or used by the Group. The Group is advised that it may proceed with a high
degree of confidence that future decisions on the matter will not impair the Group’s ability to operate its hydro assets. A separate
claim over fresh water and geothermal resources was lodged by the New Zealand Maori Council with the Waitangi Tribunal in
2012. The Tribunal concluded that Maori have residual (but as yet undefined) proprietary rights in fresh water and geothermal
resources and it will be for the Government to determine how any such rights and interests may best be addressed. The impact of
this claim on the Group’s operations is unknown at this time.
From time to time the Group will issue letters of credit and guarantees to various suppliers in the normal course of business.
However, there is no expectation that any outflow of resource relating to these letters of credit or guarantees will be required as
a consequence.
The Group has no other material contingent assets or liabilities.
NOTE 12. SUBSEQUENT EVENTS
The Board of Directors has approved an interim dividend of 6 cents per share to be paid on 3 April 2018.
There are no other material events subsequent to balance date that would affect the fair presentation of these Group financial
statements.

OTHER DISCLOSURES
The company’s net tangible assets per share (excluding treasury stock) as at 31 December 2017 was $2.32,
compared with $2.35 at 31 December 2016.
Control of entities that was gained or lost during the period was as follows:
Company name Date control lost
MRP NRI-Peru Holdings Limited Dissolved 5 October 2017
MRP NRI-Germany Holdings Limited Dissolved 5 October 2017
MRP NRI-Chile Holdings Limited Dissolved 5 October 2017
MRP Geotermia Chile Limitada Sold 24 July 2017
SHAREHOLDER INFORMATION
Shareholder enquiries
Changes in address, dividend payment details and
investment portfolios can be viewed and updated online:
www.investorcentre.com/nz. You will need your CSN and FIN
numbers to access this service.
Enquiries may be addressed to the Share Registrar
(see Directory for contact details).
Investor information
Our website at www.mercury.co.nz is an excellent source of
information about what’s happening within the company.
Our Investor Centre allows you to view all regular investor
communications, information on our latest operating and
financial results, dividend payments, news and share price history.
Electronic shareholder communication
It is quick and easy to make the change to receiving your reports
electronically. This can be done either:
• Online at www.investorcentre.com/nz by using your CSN
and FIN numbers (when you log in for the first time). Select
‘View Portfolio’ and log in. Then select ‘Update My Details’
and select ‘Communication Options’; or
• By contacting Computershare Investor Services Limited by
email, fax or post.
32 // 33

DIRECTORY
insight
creative.co.nz
MERC153
Board of Directors
Joan Withers, Chair
Prue Flacks
Andy Lark
James Miller
Keith Smith
Scott St John
Patrick Strange
Mike Taitoko
Executive Team
Fraser Whineray,
Chief Executive
Kevin Angland,
General Manager Digital Services
Nick Clarke,
General Manager Geothermal & Safety
Phil Gibson,
General Manager Hydro & Wholesale
Julia Jack,
Chief Marketing Officer
William Meek,
Chief Financial Officer
Tony Nagel,
General Manager Corporate Affairs
Matt Olde,
Metrix Chief Executive
Marlene Strawson,
General Manager People & Performance
Company Secretary
Howard Thomas
Investor Relations & Sustainability Enquiries
Tim Thompson
Head of Treasury & Investor Relations
Mercury NZ Limited
P O Box 90399
Auckland 1142
New Zealand
Phone: +64 27 517 3470
Email: investor@mercury.co.nz
Registered Office in New Zealand
Level 3, 109 Carlton Gore Road, Auckland 1023
Registered Office in Australia
c/– TMF Corporate Services
(Australia) Pty Limited
Level 16, 201 Elizabeth Street
Sydney NSW 2000
Phone: +61 2 8988 5800
Legal Advisors
Chapman Tripp
Level 35, ANZ Centre
23-29 Albert Street, Auckland 1010
PO Box 2206, Auckland
Phone: +64 9 357 9000
Bankers
ANZ Bank
ASB Bank
Bank of New Zealand
Mitsubishi UFJ Financial Group
Westpac
Credit Rating (reaffirmed December 2017)
Long term: BBB+
Outlook: Stable
Share Register – New Zealand
Computershare Investor Services Ltd
Level 2, 159 Hurstmere Road, Takapuna,
Auckland 0622
Private Bag 92 119
Auckland 1142
New Zealand
Phone: +64 9 488 8777
Email: enquiry@computershare.co.nz
Web: www.investorcentre.com/nz
Share Register – Australia
Computershare Investor Services Pty Ltd
Yarra Falls, 452 Johnston Street, Abbotsford, VIC 3067
GPO Box 3329
Melbourne, VIC 3001
Australia
Phone: 1 800 501 366 (within Australia)
Phone: +61 3 9415 4083 (outside Australia)
Email: enquiry@computershare.co.nz

ENERGY MADE
WONDERFUL

---

APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumber
Date
Nature of event
BonusIf ticked,
Rights Issue
Tick as appropriate
Issue
state whether:Taxable
/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
x
whether:
Interim
x
YearSpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per securityPayment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
SupplementaryAmount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
FDP Credits
Withholding Tax(Give details)
Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
EMAIL: announce@nzx.com
Notice of event affecting securities
1
Mercury NZ Limited
Howard Thomas, Company SecretaryDirectors' resolution
+64 9 308 8200+64 9 308 820927022018
Mercury NZ Limited ordinary sharesNZMRPE0001S2
In dollars and cents
Income available for distribution
$0.060
not applicable
Enter N/A if not
applicable
$$0.004167$0.023333
$
New Zealand Dollars$0.010588
$0.060
Date Payable
3 April, 2018
15 March, 20183 April, 2018

---

CSN/SecurityHolder number: #####








DEAR SHAREHOLDER,
Mercury is pleased to share with you highlights of our results for the half year
to 31 December 2017.
We invite you to view our 2018 Interim Report, along with Mercury's investor
presentation and news release.
VIEW OUR
2018 INTERIM REPORT



SEE OUR INVESTOR
PRESENTATION & NEWS RELEASE







2018 Interim Results

Highlights of the six months to 31 December 2017



OPERATING EARNINGS (EBITDAF)


11% lift to $301 million
achieved through favourable hydrology and strong company execution



NET PROFIT AFTER TAX


up $19 million to $132 million



INTERIM ORDINARY DIVIDEND


6.0 cents per share fully-imputed,
up 3.4%, to be paid on 3 April 2018
FY2018 ordinary dividend guidance of 15.0 cents per share maintained






It is my pleasure to report to you on Mercury's performance for the half year
ended 31 December 2017.
Mercury's earnings uplift to $301 million from $270 million in the prior
corresponding period was driven by strong North Island water inflows leading
to record generation of 4,107GWh, up from 3,770GWh. The conditions
coincided with lower than average output from South Island hydro generators,
playing to Mercury's strategic locational advantage.

A strong focus on execution in the half year was particularly pleasing as the
business worked through a number of initiatives aimed at lifting performance.
Capital expenditure increased to $59 million in HY2018 from $54 million in
HY2017 due to completion of technology upgrade projects and execution of
geothermal maintenance plans. Through the period, high geothermal
availability was maintained at 95%.
Customer growth continued through the period, up 1,000, attributable to
Mercury's loyalty-focused customer strategy including offers such as earning
Airpoints Dollars™.
Mercury's FY2018 EBITDAF guidance is $530 million subject to any material
events, significant one-off expenses or other unforeseeable circumstances
including hydrological conditions.
On behalf of the Board, I look forward to a solid second half of the year that
builds on the platform that has been established, and reporting to you, our
owners, in August 2018.
Kind regards,

Joan Withers | Chair, Mercury NZ Limited



Our most recent and future Annual and Interim Reports are, or will be,
available on our website www.mercury.co.nz/investors



You are receiving this email because you have signed up for electronic security holder communications.
You can unsubscribe to email notifications at any time by logging into Computershare's Investor Centre
http://www.investorcentre.com/nz.
Select 'My profile' and click on the 'update' button on the communication preferences tile.
This email was sent to you by Mercury. Level 3, 109 Carlton Gore Road, Newmarket, Auckland 1023.
© Copyright 2018 Mercury NZ Ltd.
COMPUTERSHARE INVESTOR SERVICES LTD

---

CSN/Security Holder number: #####









DEAR BONDHOLDER,
Mercury is pleased to share with you highlights of our results for the half year
to 31 December 2017.
We invite you to view our 2018 Interim Report, along with Mercury's investor
presentation and news release.
VIEW OUR
2018 INTERIM REPORT



SEE OUR INVESTOR
PRESENTATION & NEWS RELEASE







2018 Interim Results

Highlights of the six months to 31 December 2017



OPERATING EARNINGS (EBITDAF)


11% lift to $301 million
achieved through favourable hydrology and strong company execution



NET PROFIT AFTER TAX


up $19 million to $132 million



S&P CREDIT RATING

BBB+ re-affirmed in December 2017






It is my pleasure to report to you on Mercury's performance for the half year
ended 31 December 2017.
Mercury's earnings uplift to $301 million from $270 million in the prior
corresponding period was driven by strong North Island water inflows leading
to record generation of 4,107GWh, up from 3,770GWh. The conditions
coincided with lower than average output from South Island hydro generators,
playing to Mercury's strategic locational advantage.
A strong focus on execution in the half year was particularly pleasing as the
business worked through a number of initiatives aimed at lifting performance.

Capital expenditure increased to $59 million in HY2018 from $54 million in
HY2017 due to completion of technology upgrade projects and execution of
geothermal maintenance plans. Through the period, high geothermal
availability was maintained at 95%.
Customer growth continued through the period, up 1,000, attributable to
Mercury's loyalty-focused customer strategy including offers such as earning
Airpoints Dollars™.
Mercury's FY2018 EBITDAF guidance is $530 million subject to any material
events, significant one-off expenses or other unforeseeable circumstances
including hydrological conditions.
On behalf of the Board, I look forward to a solid second half of the year that
builds on the platform that has been established, and reporting to you in
August 2018.
Kind regards,

Joan Withers | Chair, Mercury NZ Limited




Our most recent and future Annual and Interim Reports are, or will be,
available on our website www.mercury.co.nz/investors




You are receiving this email because you have signed up for electronic security holder communications.
You can unsubscribe to email notifications at any time by logging into Computershare's Investor Centre
http://www.investorcentre.com/nz.
Select 'My profile' and click on the 'update' button on the communication preferences tile.
This email was sent to you by Mercury. Level 3, 109 Carlton Gore Road, Newmarket, Auckland 1023.
© Copyright 2018 Mercury NZ Ltd.
COMPUTERSHARE INVESTOR SERVICES LTD